On August 5, 2026, the Internal Revenue Service (IRS) and the U.S. Department of the Treasury released guidance to clarify rules around employer tax credits for paid leave under the Working Families Tax Cuts Act (WFTC).
Quick Hits
The IRS and the Treasury Department issued guidance that addresses the employer tax credit for paid family and medical leave, which Congress made permanent and expended under the Working Families Tax Cuts Act (WFTC), a part of the comprehensive omnibus budget reconciliation bill of 2025.
The employer’s leave policy must permit at least two weeks of paid family and medical leave to qualify for the tax credit.
The WFTC introduced a new option for calculating the employer’s tax credit by the amount of premiums paid for paid leave insurance.
Employers that provide paid family and medical leave to their employees may be eligible for a tax credit. Section 45S of the Internal Revenue Code provides a general business credit for employers that maintain a written… Read the complete article here...
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